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That’s not really surprising, according to Adrian Raftery, Associate Professor and Head of Financial Planning at Deakin Business School. “It’s a major shake-up for the industry,” he admits.
“The extra education requirement is a grudge purchase for most advisers, as it’s one they don’t necessarily want to do, and it will cost them time and money.”
‘Blueprint’ makes welcome changes
Despite the angst, it’s not all bad news. FASEA announced a revised standards framework in late-2018 with some welcome modifications.
“It’s important for advisers to recognise that there were some corrections made in the release of the new blueprint document and these will help them in terms of compliance,” Raftery says.
The refinements reflect some of the key problems identified in the 800 submissions received by FASEA on the original framework.
Although advisers have been frustrated with the drawn out consultation process, Raftery says you should welcome the changes in the blueprint document.
“Now we have got a lot more certainty about what is going to be in the standards and advisers can make more informed decisions. After the first consultation period there was a lot of adviser angst.”
With six of FASEA’s seven standards now finalised and at the legislative stage, Raftery believes it’s important for advisers to recognise the new requirements are a fact of life.
Here’s nine things you may not know about the blueprint:
1. New route for postgraduate career changers
The blueprint includes a pathway for mature entrants seeking to join the advice profession via an approved graduate diploma.
2. Clearer definition of RPL for existing advisers
FASEA is further defining recognition of prior learning (RPL) for existing advisers and providing guidance on credits for previous coursework.
Advisers will now be able to seek RPL for the Corporations Act, and the Behavioural Finance Client and Consumer Behaviour bridging courses. However, there will be no RPL for the new Code of Ethics course.
3. Recognition of prior learning for new advisers
New entrants can seek RPL from an education provider in line with its credit and RPL guidelines.
4. Course credits for the ADFP
Advisers holding an Advanced Diploma of Financial Planning (ADFP) will be eligible for two course credits.
5. Reduction in CPD hours
Advisers will only need to complete 40 continuous professional development (CPD) hours (down from 50) each CPD year, 70% of which must be approved by your licensee.
6. Revision of the ‘related degree’ rules
Definition of an acceptable ‘related degree’ has been extended and advisers holding this qualification will only be required to complete three bridging courses, together with a FASEA approved capstone unit.
7. Reduction in PY hours
The hours required to complete the Professional Year (PY) have been reduced, with new entrants now requiring 100 hours of structured training and 1,500 hours of work experience.
8. Foreign qualifications to be recognised
Advisers will be able to have overseas qualifications assessed to determine the relevant pathway to meet FASEA’s education standard.
9. Release of Financial Adviser Exam details
The curriculum will focus on applied knowledge in actual financial advice scenarios in three competency areas. The exam itself will be 3.5 hours (including reading time), with both multiple choice and written questions. Recommended reading lists and a practice exam will be published.
Key dates for advisers
FASEA has also reiterated the key compliance deadlines for the new standards.
All existing advisers will need to have passed the universal exam by 31 December 2020, while you will have until 31 December 2023 to comply with the new education requirements.
Membership of an ASIC approved code of ethics monitoring body will be mandatory from 1 January 2020.
Looking to the future
Although many advisers will find the extra education requirements unwelcome, Raftery believes they are in the long-term best interests of the profession.
“The real positive from this is there will be increased public trust of the financial advice industry. The public will see there has been real, meaningful change,” he says.
“There will be some pain, but there will be generational benefits for advisers willing to stay the course. Every financial adviser – no matter how long they have been in the profession – will find some nuggets of gold in the extra learning that they can use to improve their business.”
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Important: This article has been prepared without taking account of the objectives, financial or taxation situation or needs of any particular individual. Before acting on the information, you should consider its appropriateness to your circumstances and if necessary, seek appropriate professional advice. Any information used in this article is for illustrative purposes only. Adrian Raftery is external and not a member of the Commonwealth Bank of Australia Group of Companies (the Group) and the content or any view expressed by Adrian Raftery does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. CBA, nor members of the Group accept any liability for losses or damage arising from any reliance on external parties their products, services and material. Past performance is no guarantee of future performance.